India stands far behind in terms of innovation. A study by industry body CII and B-School INSEAD, ranks India at the 41st position, down from 23rd last year in the Global Innovation Index (GII). The index places U.S. at the top, followed by Germany, Sweden and the UK. Asian economies such as Malaysia and China are placed above India in the rankings, occupying the 25th and 37th positions respectively.

"This index speaks about which nations and regions respond best to the challenge of innovation, taking into account a number of factors," said, Prof Soumitra Dutta, Dean of External Affairs, INSEAD.

The study that covered 130 countries used data compiled by various international agencies including the World Bank and the World Economic Forum. Input and output are the two pillars of the index, which are further divided into various sub-sectors or variables. Input consists of categories such as institutions and policies, human capacity, general ICT infrastructure, market and business sophistication-in short, the factors needed to trigger innovation. Output consists of knowledge, competitiveness and wealth, which get better if a nation is innovative.